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Embattled HUD Secretary Steps Down Amid Allegations

March 31, 2008 at 6:45 PM EDT
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Housing and Urban Development Secretary Alphonso Jackson resigned Monday amid allegations he granted favors to friends involving HUD contracts. A Washington Post reporter discusses the move.
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GWEN IFILL: Now, the nation’s top housing official resigns. Housing Secretary Alphonso Jackson stepped down today amid allegations over whether he steered some contracts to friends and political allies.

Carol Leonnig of the Washington Post has been covering the story, and she joins us now.

Welcome, Carol.

CAROL LEONNIG, The Washington Post: Thank you.

GWEN IFILL: So why, do we know, as close as we could understand, why he quit now?

CAROL LEONNIG: Well, as far as we can tell, sources close to HUD and to the White House say that the White House aides ushered him over to the White House on Monday a week ago and wanted to talk to Secretary Jackson about his future.

We don’t know what the conversation was about. But it looks as though the White House started this ball rolling, suggesting that Jackson couldn’t be an effective leader with so many controversies swirling around him.

GWEN IFILL: That, with the big housing crisis underway, that he was not necessarily the person to lead the department?

CAROL LEONNIG: There was some element of that. Certainly, Secretary Paulson’s announcement today, such a news-grabber, on the same day that Secretary Jackson is announcing his resignation, rather, in about three minutes and 40 seconds, there’s something about that.

But, as well, there are a series of senators that have been asking for the secretary’s resignation because he will not answer questions about whether or not his agency has been playing favorites, trying to steer contracts to his friends, and a series of lawsuits and inspector general and grand jury investigations.

Housing contracts under question

GWEN IFILL: Let's talk about some of these questions which are still hovering out there unanswered. One was his behavior or his alleged behavior in a case involving the Philadelphia Housing Authority. That's where the actual investigation is going on.

CAROL LEONNIG: That definitely got a lot of attention. We reported at the Post in January and February that a little-noticed lawsuit had been filed. And in it was a declaration by the Philadelphia Housing Authority director, basically, you know, point-blank saying, "Secretary Jackson is punishing my Philadelphia Housing Authority and 80,000 Philadelphia low-income residents because I refuse to turn over a $2 million piece of property to a friend of Jackson's," a developer in Philadelphia named Kenny Gamble.

And, indeed, the federal agency had stripped the Philadelphia Housing Authority of about $50 million in funding in an unrelated matter and it looked really bad.

It particularly looked worse to senators when some e-mails we reported on internally showed that two of Jackson's senior assistant secretaries had joked about punishing the Philadelphia Housing Authority and taking away, quote, unquote, "all its federal dollars."

GWEN IFILL: And there were questions also raised with other projects in the Virgin Islands and in New Orleans.

CAROL LEONNIG: Yes, those began with a HUD inspector general investigation looking at whether two or three different contractors that Jackson has ties to were getting favoritism in emergency no-bid contracts in New Orleans and in the Virgin Islands Housing Authorities.

Now, keep in mind that there might be some contracting that's inappropriate, but it's not necessarily criminal if you try to push it towards one of your friends. What was unusual in this case was that Secretary Jackson had told investigators and told the Senate in congressional testimony that he never interferes in any housing authority contracts.

Jackson's response to allegations

GWEN IFILL: Now, as we mentioned in the news summary, Secretary Jackson said today he was quitting only to spend more time with his family. But he spoke to our Betty Ann Bowser sometime last month, and she asked him at the time about the charges that were hanging over his head. And we have on tape what his response was.

ALPHONSO JACKSON, U.S. Secretary of Housing and Urban Development: There's been a lot of misinformation thrown out in this process. I think we should let the inspector do their duties by looking at this. And I believe, when the air is cleared, I will clearly be cleared of all these accusations that have been made.

GWEN IFILL: I want to go back to one other question that was raised about Secretary Jackson early on and it's something that he apparently said to a Dallas group early on about favoritism in the awarding of contracts.

CAROL LEONNIG: Yes. It's ironic, in a way, that the very first HUD inspector general investigation was prompted by Secretary Jackson sort of bragging to a group of minority real estate agents in Dallas that, when a contractor told him he didn't really like the president, Jackson asserted that he stopped that contractor from getting any federal work.

Later on, when the HUD I.G. started to look into this as an abuse of his power, Jackson said he had lied and made it up.

At the end of the day, the inspector general came back and reported that the secretary hadn't succeeded in exerting undue influence on the contract, but he had made some inappropriate comments to his staff.

GWEN IFILL: A lot of questions raised, a lot of clouds in the air, no obvious answers. Do these investigations, do these questions end with his resignation today?

CAROL LEONNIG: That is an excellent question and it's unknown at this time. Remember, the HUD inspector general began a lot of these investigations but then was joined by the FBI, a real indication of concern, I'm sure, for Secretary Jackson.

And when we've asked both Justice and HUD inspector general for comment, they've said, you know, "We can't discuss an ongoing or pending investigation." So we still have to wait and see.

And that makes the timing of this resignation so interesting, because his followers and supporters had insisted that he would stay in office until the end of this administration.

Fixing the mortgage crisis

GWEN IFILL: The Department of Housing and Urban Development, among other things, oversees the Federal Housing Administration, which is a linchpin or part of the rescue plan in this current mortgage crisis.

Is there any discussion at all about someone being able to pick up the ball very easily? Or was there any concern at all that you can detect in your reporting that Secretary Jackson, being in that position, was going to make it difficult to speak to this immediate crisis?

CAROL LEONNIG: I think that there were a lot of things going on for Secretary Jackson that were really unrelated to the mortgage crisis. And in our reporting, what we've heard is that he became a difficult ball-carrier, at least in perception, for this reform and this white horse to ride in and try to save everybody who is underwater on their mortgages.

As well, Secretary Jackson had said some things that were probably not well-received by people who were struggling to stay up with their payments. Recently, when asked last year about the mortgage crisis and predatory lending and painful financing terms, he said that he didn't think it was low-income people or struggling people that were struggling. He thought it was, in his quote, "yuppies, buppies and guppies," that had just all overbought.

And that really irritated a lot of middle-income folks who were saying, "No, we're struggling."

GWEN IFILL: "Yuppies" being young, urban professionals, "buppies" being black, urban professionals, and "guppies" being gay, urban professionals.

CAROL LEONNIG: Thank you, Gwen.

GWEN IFILL: I was just making sure that everybody knew what a "guppy" was. OK, Carol Leonnig, thank you so much.

CAROL LEONNIG: Thank you, Gwen.